DATE: October 22, 2001
SUBJECT: Small Business Administration; Disaster Loan Program
SOURCE: Federal Register, October 22, 2001, Vol. 66, No. 204, page 53329
AGENCIES: Small Business Administration (SBA)
ACTION: Interim Final Rule
SYNOPSIS: SBA is expanding the eligibility for economic injury disaster loans (EIDLs) to include small business concerns outside the declared disaster areas that suffered substantial economic injury as a direct result of the destruction of the World Trade Center, New York, New York, or the damage to the Pentagon on September 11, 2001.
EDITOR'S NOTE: The SBA's EIDL regulations are in Title 13 of the Code of Federal Regulations (CFR), "Chapter 1, Small Business Administration," "Part 123, Disaster Loan Program".
DATES: The interim final rule is effective August 24, 2001. Comments on the interim final rule must be submitted by November 21, 2001.
ADDRESSES: Send comments to Herbert Mitchell, Associate Administrator for Disaster Assistance, U.S. Small Business Administration, 409 Third Street, SW, Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT: James Rivera, Deputy Associate Administrator, Office of Disaster Assistance, 202-205-6734.
SUPPLEMENTAL INFORMATION: The SBA is specifically authorized by 15 U.S.C. 636(b)(2) to provide economic injury disaster assistance to small businesses suffering substantial economic injury in areas affected by disasters. Furthermore, there is nothing in the Small Business Act that precludes SBA from expanding EIDL assistance to businesses located beyond the areas contiguous to the declared disaster areas. Accordingly, SBA is adding to 13 CFR Part 123 a new Subpart G, Economic Injury Disaster Loans as a Result of the September 11, 2001 Terrorist Attacks, to authorize it to provide EIDL assistance to eligible small businesses located beyond such contiguous areas. SBA estimates that approximately $852 million will be loaned to small businesses as a result of this new subpart.
The new Part 123, Subpart G, consists of the following:
|123.600||Are economic injury disaster loans under this subpart limited to the geographic areas contiguous to the declared disaster areas?|
|123.601||Is my business eligible to apply for an economic injury disaster loan under this subpart?|
|123.602||When would my business not be eligible to apply for an economic injury disaster loan under this subpart?|
|123.603||What is the interest rate on an economic injury disaster loan under this subpart?|
|123.604||How can my business spend my economic injury disaster loan under this subpart?|
|123.605||How long do I have to apply for a loan under this subpart?|
|123.606||May I request an increase in the amount of an economic injury disaster loan under this subpart?|
Section 123.601 states that SBA EIDL assistance will be available to small businesses if they can show that they suffered substantial economic injury as a direct result of the destruction of the World Trade Center, New York, New York, or the damage to the Pentagon on September 11, 2001, or any related federal action occurring between September 11, 2001 and October 22, 2001, such that they are unable to meet their obligations as they mature or are unable to pay their ordinary and necessary operating expenses. The small business must also demonstrate that the principal owners of the business have used all reasonably available funds, and that the business is unable to obtain credit elsewhere.
Section 123.602 states that SBA cannot provide EIDL assistance to a nonprofit or charitable entity or a business that derives more than one-third of its gross annual revenue from legal gambling activities. It is also unable to provide EIDL assistance to a business principally engaged in lending, multi-level sales distribution, speculation, or investment, teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or a business engaged in political or lobbying activities.
Section 123.603 provides that the interest rate for any EIDL will be 4% or less.
Section 123.604, states that an EIDL loan can only be used by a business for working capital necessary to carry the business until resumption of normal operations and for expenditures necessary to alleviate the economic injury attributable to the terrorist attacks. EIDL assistance is not available for economic losses attributable to an economic downturn, and it may not exceed the amount attributable to the September 11, 2001, attacks or the specified federal action. A loss of anticipated profits or a drop in sales is not considered substantial economic injury for this purpose. Further, EIDL assistance cannot be used to refinance indebtedness that the business incurred prior to the terrorist attacks on September 11, 2001, nor can such assistance be used to pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business.
Section 123.605 provides until January 22, 2002, for eligible firms to apply for a loan under Subpart G. All applications must be postmarked on or before that date. The SBA may extend this deadline in its discretion for good cause.
Section 123.606 states that any request for an increase in EIDL assistance must be made not later than one year after the date SBA approves the initial loan request.
Applications can be filed at the SBA disaster office servicing the applicant's state:
FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.
Return to the Dispatches Library.
Return to the Main Page.